What are “critical” minerals and what is the US going to do about them?: Andy Home

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By Andy Home

LONDON, May 24 (Reuters) – NioCorp Developments,
which is in the process of raising financing for a minerals
project in Nebraska, has just seen its Toronto-listed shares
surge from C$0.52 to $0.70 in the space of two days thanks to
the U.S. government.

NioCorp’s planned mine and processing facility at Elk Creek
will produce three metals – scandium, niobium and titanium –
that have all been officially designated “critical” minerals by
the Interior Department.

No-one’s mined niobium in the United States since 1959,
according to the United States Geological Survey (USGS). The
country relies exclusively on imports, mostly from Brazil.

The same is true of scandium, a metal which, according to
NioCorp, has been used for several decades in “cutting-edge
Soviet and Russian military technologies” but not by the U.S.
armed forces due to a lack of supply.

This is precisely the point for U.S. President Donald
Trump’s administration, which is developing a strategy to reduce
import reliance for metals considered “critical to the economic
and national security of the United States.”

 

WHAT’S CRITICAL?

The Department of the Interior has identified 35 minerals as
“critical”.

The designation is based on a matrix of criteria, including
physical scarcity, concentration of production, supply chain
reliability and U.S. import dependency.

Or, as summarized by one Commerce Department representative,
“critical means you need it, strategic means you don’t have it.”

The unnamed official, quoted by the USGS in its explanation
of the methodology behind the list, was involved with the
1978-1979 Presidential Review of Nonfuel Minerals Policy.

Which is a reminder that this is not the first U.S.
Administration that has been worried about mineral import
dependence.

However, the list of minerals deemed “critical” has changed
significantly over the intervening 40 years as manufacturing
processes have advanced.

Consider, for example, the case of the humble computer chip.
In the 1980s, according to the USGS, only 12 elements were used
in its manufacture. A decade later and the number had risen to
16 and by 2006 as many as 60 elements were being used for
high-speed, high-capacity integrated circuits.

Whole new industries have emerged over the same time frame.
The lithium ion battery, which sits at the heart of the green
transport revolution, was only commercialised at the start of
the 1990s.

No big surprise, then, to see both lithium and cobalt, two
key but supply-challenged inputs into the new generation of
batteries, appear on the list.

So too does the rare earth elements group. None of them are
domestically produced in the U.S. and most of them come from
just one country, China.

China is also the dominant supplier of other esoteric but
“critical” components of the elemental table such as antimony,
indium, tellurium and tungsten.

The list includes more conventional commodities such as the
platinum group metals (all of them), tin and aluminium.

The USGS stresses that in such cases it’s not just the metal
but the entire supply chain that is problematic.

“Aluminum is included to represent the aluminum supply chain
because the United States is 100 percent reliant on imports of
metallurgical grade bauxite, and some forms of high purity
alumina and aluminum metal used for important applications also
are considered critical.”

The full list of critical minerals can be found here: https://www.usgs.gov/news/interior-releases-2018-s-final-list-35-minerals-deemed-critical-us-national-security-and

 

REDUCING IMPORT RELIANCE

The U.S. government is imposing tariffs on imports of
aluminium with the stated aim of rekindling dormant domestic
production capacity and reducing import dependency.

And increasing domestic supply across the spectrum of the
periodic table is going to be a core recommendation in the
report being compiled by the Commerce Department for submission
to President Trump by Aug. 16, 2018.

Commerce is also likely to recommend improved mapping of
resources, streamlining lease permitting and anything else that
will “increase discovery, production and domestic refining of
critical minerals.”

One possible outcome, welcomed by companies such as NioCorp
but feared by environmental groups, could be a revitalization of
the U.S. mining industry.

As the Commerce Department itself notes, “any
recommendations to improve permitting processes for critical
minerals will improve permitting processes for all minerals
administered under the same laws and regulations by the Bureau
of Land Management and other Federal land management agencies.”

However, it’s going to be a slow process.

NioCorp, for example, is the only prospective near-term
project for niobium and scandium in North America and, even with
a full feasibility study already completed, the company still
needs to raise around $1 billion to realise its ambitions.
Which is why the Commerce Department report will also look at
other sources of supply such as recycling and cooperating with
“allies and partners” to access targeted minerals.

DEFENSE LOGISTICS AGENCY

The Commerce Department’s list of potential measures doesn’t
include the creation of a national stockpile of critical
minerals such as that operated in China by the state-run
Strategic Reserves Bureau.

That’s because the United States already has one, operated
by the Defense Logistics Agency (DLA), the body charged with
managing supply chains for the country’s armed forces.

As of September 2016, the most recent operational report,
the DLA held stocks of many of the minerals on the Interior
Department’s list with a total value of $1.15 billion.

On the current financial year’s potential shopping list are
rare earths (up to a maximum 416 tonnes), battery precursors
such as lithium nickel cobalt aluminium oxide (2.16 tonnes),
ferroniobium (209 tonnes) and truly esoteric goodies such as
cadmium zinc tellurium and tungsten rhenium.

 

CATCHING UP

The DLA is also heavily involved both in recycling materials
such as germanium and studying possible alternatives to existing
“critical” military inputs.

But it can only be part of a broader strategy that will have
to be both multidimensional and highly flexible.

There is no simple solution to the fact that the United
States doesn’t have any commercially exploitable bauxite
deposits or that cobalt production is so concentrated on the
African Copperbelt.

Moreover, other countries, particularly China, have already
aggressively built out supply chains to supply the
battery-makers that will power the world’s growing electric
vehicle fleet.

Identifying which minerals are “critical” is the easy part.
Working out what to do about them is going to be much harder.
(Editing by Keith Weir)